PM: Based on world prices, local fuel prices could fall

THE Prime Minister said people may actually pay less at the gas station as he outlined projected decreases in the cost of different types of fuel, if there are consequent decreases in the price of fuel on the global markets.

During his contribution to the budget debate on Tuesday evening, Dr Rowley responded to criticisms from the Opposition over the capping of the fuel subsidy at $1 billion, noting it was a necessary difficult decision.

He accused the Opposition of attacking government's policies without providing alternative solutions.

"Our friends on the other side would have you believe that is not enough, so what they are saying is maybe we should put $3 billion (to the fuel subsidy), take $2 billion from health, because it has to come from somewhere. "But we have to stand in full public view and say the subsidy will be $1 billion."

He added that one of the challenges facing government was the high cost of the fuel subsidy, adding that without a limit of $1 billion, it would cost the country even more in the long-term.

He justified the limit by breaking down the cost of premium, super and diesel fuel if fuel prices fell.

"The government says we will keep the offer a billion dollars on subsidy so it will go like this at $87.50 per barrel, premium would be $7.75, super would be $6.97 and diesel at $4.41."

Diesel he said would remain at $4.41 as government put 0.50 cents per litre.

He added that government through the Ministry of Finance would post the local price of fuel based on the average price of oil, on a montly basis.

"If that average price was $85, premium will drop to $6.92, super to $6.66 but diesel will stay at $4.41 because we are keeping diesel with it's 50 cent increase.

"If it drops to $80, premium drops to $6.28, super to $6.05 and if it drops to $75, premium will drop to $5.68 and super will drop to $5.43. So super between $87 and $75 the price will drop from $6.97 to $5.43."

Rowley also noted that a falling fuel price was important not only to the subsidy but also revenue generated.